James and Audrey Sharkey v. Susan Clarke, et al.

District Court, D. Nevada·Decided July 10, 2026·No. 2:25-cv-00549·Unknown

Opinion

DISTRICT OF NEVADA

James and Audrey Sharkey, Case No.: 2:25-cv-00549-CDS-EJY

Plaintiffs Order Sustaining in Part Plaintiffs’ Objection and Accepting in Part and v. Modifying the Magistrate Judge’s Report and Recommendation Susan Clarke, et al., [ECF Nos. 28, 29] Defendants James and Audrey Sharkey1 bring this civil-rights action under 42 U.S.C. § 1983. They sue thirteen defendants for alleged constitutional violations related to the denial of James’s application for a broker’s license.2 Second am. compl., ECF No. 23. In May 2025, United States Magistrate Judge Elayna J. Youchah screened the plaintiffs’ second amended complaint and issued a report recommending (R&R) dismissal with prejudice because the plaintiffs failed to state a claim upon which relief may be granted. R&R, ECF No. 28. Judge Youchah also recommends denying further leave to amend because this marked the plaintiffs’ third attempt to plead viable claims. Id. at 10. The plaintiffs object to the dismissal recommendation. Obj., ECF No. 29. After conducting a de novo review, I sustain the plaintiffs’ objection in part, accept in part and modify the R&R, and dismiss with prejudice the plaintiffs’ second amended complaint. I. Legal standard “A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1). The court may “accept, reject, or modify, in whole or in part, the findings or

1 Because James Sharkey and Audrey Sharkey have the same last name, I refer to James and Audrey by their first names for clarity’s sake. I intend no disrespect by doing so. 2 The named defendants are Susan Clarke, Christal Keegan, Kristopher Sanchez, the Nevada Real Estate Division, the Nevada Real Estate Commission, Sharath Chandra, Sean Gustafson, Dr. Kristopher Sanchez, Donna Ruthe, Forrest Barbee, David R. Tina, Tina Gurr, and Lee Gurr. ECF No. 23. recommendations made by the magistrate judge.” Id. A magistrate judge’s order should only be set aside if it is clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). A magistrate judge’s order is “clearly erroneous” if the court has “a definite and firm conviction that a mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); Burdick v. Comm’r IRS, 979 F.2d 1369, 1370 (9th Cir. 1992). “An order is contrary to law when it fails to apply or misapplies relevant statutes, case law[,] or rules of procedure.” UnitedHealth Grp., Inc. v. United Healthcare, Inc., 2014 WL 4635882, at *1 (D. Nev. Sept. 16, 2014). II. Discussion The plaintiffs raise seven objections. ECF No. 29. Specifically, they argue that the R&R errs in (1) applying sovereign immunity without considering Ex parte Young, (2) granting absolute prosecutorial immunity to Keegan, (3) applying Rooker-Feldman to bar all claims, (4) dismissing Monell claims, (5) dismissing substantive and procedural due process claims, (6) dismissing equal protection claims, and (7) dismissing other claims. Id. at 3–8. They further assert that the R&R abuses discretion by denying further amendment. Id. at 8. A. Plaintiffs’ objection that the R&R errs in applying sovereign immunity without considering is overruled. The plaintiffs’ first objection disputes the R&R applying sovereign immunity, arguing that their claim is permissible under the Ex parte Young exception because: (1) they are suing state officials in their official capacities; and (2) they seek prospective injunctive relief—i.e., fair reconsideration of James’s license and barring further retaliation. Id. at 3. The plaintiffs concede that the Nevada Real Estate Division and Nevada Real Estate Commission are immune under the Eleventh Amendment. Id. They argue, however, that the magistrate judge erred by “failing to recognize that [they] seek prospective injunctive relief . . . which is permissible against state officials in their official capacity under Ex parte Young.” Id. The Supreme Court has long held that a plaintiff may not circumvent the Eleventh Amendment by suing specific state officials instead of the State. See Hafer v. Melo, 502 U.S. 21, 25 (1991) (holding that states and state actors are not “persons” under the provisions of § 1983). Thus, suits against state actors “acting in their official capacities” are actually suits against the state and are thus barred by the Eleventh Amendment. Id. at 26. But sovereign immunity under the Eleventh Amendment is not limitless. The Ex parte Young doctrine is a very narrow exception to Eleventh Amendment immunity. Under Ex parte Young, “individuals may sue state officials in federal court for prospective relief from ongoing violations of federal law, as opposed to money damages, without running afoul of the doctrine of sovereign immunity.” Koala v. Khosla, 931 F.3d 887, 895 (9th Cir. 2019). Specifically, it does not bar “claims seeking prospective injunctive relief . . . to remedy a state’s ongoing violation of federal law.” Ariz. Students’ Ass’n v. Ariz. Bd. of Regents, 824 F.3d 858, 865 (9th Cir. 2016) (citing Ex parte Young, 209 U.S. 123, 159–60 (1908)). Although Ex parte Young permits suits against state officials for prospective relief to end an ongoing violation of federal law, the exception is narrow and does not apply where the requested relief is retrospective or would require the court to review and overturn past state action. See Ex parte Young, 209 U.S. at 155–56; Green v. Mansour, 474 U.S. 64, 68 (1985). Therefore, to determine whether the Ex parte Young doctrine applies, “a court need only conduct a ‘straightforward inquiry into whether [the] complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective.’” Verizon Md. Inc. v. PSC, 535 U.S. 635, 645 (2002) (quoting Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 296 (1997)). The plaintiffs fail to satisfy both prongs. First, they fail to plausibly allege an ongoing violation of federal law. Because there is no fundamental constitutional right to obtaining a broker’s license, the denial of such a license does not, by itself, give rise to a constitutional violation. “[A] professional license, once conferred, constitutes an entitlement subject to constitutional protection.” Gallo v. U.S. Dist. Court, 349 F.3d 1169, 1179 (9th Cir. 2003) (emphasis added). Said otherwise, licensed professionals are entitled to due process once a license is issued (entitling them to due process before revocation), but there is not a constitutional right to be issued a license in the first place. Second, prospective relief aims to prevent future harm or continuing violations rather than remedy past wrongs. See Green, 474 U.S. 64. The plaintiffs pray for “[i]njunctive relief prohibiting further enforcement based on the fabricated moral t

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James and Audrey Sharkey v. Susan Clarke, et al., (D. Nev. 2026).

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